The last week was the worst week for a few years. Throughout the entire week, there was not a single day that the markets would have gone up. Everything was crashing. Tech, utilities, income. My personal account with dividend/income stocks is down to -16,47%. My speculative portfolio was 40% up just the week before and is now back to a mere profit of only +0,16%.
So what now?
The answer is pretty easy. Nothing. I am not selling anything. I don’t sweat in fear. I don’t panic. The only battle I have right now is in my mind: When to buy the next batch of shares.
I have transferred some additional cash to my stock account and will keep it there for a few days, or maybe even weeks, with the aim to pick up shares of my already purchased companies when they get to a point that I will consider them to be undervalued.
JFK famously said, “a rising tide lifts all boats”. Well, this also works the other way round. But while a rising market benefits preferably speculative stocks which rise on hopes and expectations, a falling market will test and distinguish the quality of your picked companies within your portfolio.
While all stocks are likely to fall, the quality ones will fall less dramatically. These are the stocks that you should keep in mind for a re-purchase because after the fear is gone, they are more likely to recover or climb even higher much quicker. Companies of lower quality might fall further and are statistically less likely to recover at the same pace.
The long-term investor’s playbook
So the recommended approach now is this:
- Don’t panic.
- Don’t sell.
- Keep it cool and use the opportunity to identify your quality shares.
- Get some cash ready. Wait for the fear to diminish.
- Add more of your quality shares at the best possible value.